Sam Adams Brewer Surges as Comeback Hurdles Fuel Takeover Talk

(Bloomberg) -- Boston Beer Co.’s comeback bid is anything but certain. And that could be good news for investors.  

If the company fails to turn around its business in the next year, it could mean a buyer comes knocking, an analyst suggested in a report Tuesday. The remarks renewed takeover speculation for the maker of Sam Adams, helping send its shares up the most in almost two months.

The brewer has struggled to boost its performance as the craft beer industry gets more crowded. Drinkers now have more than 4,000 craft breweries to choose from, and the Boston-based company is losing market share. Boston Beer also is still searching for its next chief executive officer.

Those struggles could ultimately bring a windfall, Credit Suisse Group AG’s Laurent Grandet said in a note. 

“Although founder Jim Koch seems determined to turn the business around, we think the likelihood of a takeout goes higher if Samuel Adams rejuvenation efforts ultimately fail next year,” he said. 

The shares gained as much as 5.9 percent to $162 in New York trading, the biggest intraday gain since July 28. The stock had fallen 9.9 percent this year through Monday.

‘Agreeable Candidate’

Koch, a craft-brewing pioneer, has been clear that he doesn’t savor the idea of selling to a larger brewer. Still, Grandet said that could change if the relaunch of the company’s beers with the new marketing doesn’t revive sales. Under those circumstances, Molson Coors Brewing Co. would be “the most agreeable candidate” for Koch to consider as a buyer, he said. Grandet raised his rating on Boston Beer shares to neutral from underperform.

Molson Coors declined to comment.

That brewer is no stranger to big beer deals. Molson Coors, which has dual headquarters in Denver and Montreal, acquired the balance of the MillerCoors joint venture it had with SABMiller Plc and the Miller brand globally in 2016. That transaction was a $12 billion side deal to Anheuser-Busch InBev NV’s purchase of the London-based brewer.

Buying Boston Beer would make Molson Coors the No. 1 player in flavored malt beverages and cider and would add Sam Adams to its craft portfolio, driven by Blue Moon.

Boston Beer also has diversified into other beverages, such as Twisted Tea and Truly Spiked & Sparkling hard seltzer. And it hired a new chief marketing officer who redesigned beer labels and packaging.

To contact the reporter on this story: Jennifer Kaplan in New York at jkaplan84@bloomberg.net.

To contact the editors responsible for this story: Nick Turner at nturner7@bloomberg.net, Lisa Wolfson, Jonathan Roeder